France Telecom finds buyer for yellow-pages stake

SAN FRANCISCO (MarketWatch) -- Private-equity fund Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc. is buying a majority stake in France Telecom SA's yellow- pages directory business for about $4.3 billion, according to a report published Sunday.

A story in the online edition of The Wall Street Journal citing people familiar with the situation reported KKR and Goldman
GS, +0.17%
will purchase a 54% stake in PagesJaunes Groupe SA, a publicly traded company based in Sevres, France. France Telecom
FTE, -2.32%
is selling the shares, something it has been looking to do since June.

French business daily French business daily Les Echos reported the talks with KKR and Goldman last week. On July 19, Vivendi
V, -0.18%
dropped out of the bidding. The French media and telecommunications firm said in a statement its decision was "motivated essentially by the high price of the offering."

KKR and Goldman would like to purchase the remaining shares in the yellow-pages service.

The group is reportedly planning to offer other shareholders a premium of 2% to 3% above the bid price offered to France Telecom, if they can get 95% of all shares in the tender offer, the WSJ said. The same offer would apply to France Telecom too.

The 95% target may be tough to achieve since the current bid price is below the level PagesJaunes shares have traded lately, the report said. A France Telecom spokeswoman declined to comment to The Journal on the bid.

For the first six months of the year, PagesJaunes reported its net profit rose 9.5% over the same period in 2005. But it cut its 2006 sales forecast to growth of 6.5%, versus its prior prediction of 8.5% growth.

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